Timing carbon capture and storage (CCS) deployment across borders: A game-theoretic analysis

[en] Carbon capture and storage (CCS) is a crucial technology for reducing carbon emissions and mitigating climate change; however, its high deployment cost has resulted in uneven global adoption. This study develops a differential game model involving heterogeneous countries exposed to transboundary pollution to analyse the optimal timing for initiating CCS. Potentially, two-stage games are played where the transition from the first to the second stage is endogenously determined by the two players. We establish the existence of Markov Perfect Equilibria for general functions and provide numerical illustrations using linear-quadratic specifications. The relevant results are fourfold: (1) the threshold for CCS adoption not only depends on a country’s own costs, but also on those of others and the extent of pollution damage; (2) CCS is optimally initiated when domestic pollution crosses a critical level; (3) symmetrical pollution damage increases free-riding incentives and worsens long-term environmental outcomes; and (4) in some scenarios, it is socially optimal for certain countries to never adopt CCS, even when facing similar pollution damage as others. Global cooperation is essential for deploying CCS technologies effectively, ensuring significant emissions reductions and progress against climate change.

Disciplines :

Special economic topics (health, labor, transportation...)

Author, co-author :

CHEN, Yiwen ; Shandong Agricture University, China > Assistant Professor

PAULUS, Nora ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Finance (DF)

Wan, Xi; Nanjing University

ZOU, Benteng ; University of Luxembourg > Faculty of Law, Economics and Finance (FDEF) > Department of Economics and Management (DEM)

External co-authors :

yes

Language :

English

Title :

Timing carbon capture and storage (CCS) deployment across borders: A game-theoretic analysis

Publication date :

June 2025

Journal title :

Economic Modelling

ISSN :

0264-9993

eISSN :

1873-6122

Publisher :

Elsevier, Amsterdam, Netherlands

Peer reviewed :

Peer Reviewed verified by ORBi

Focus Area :

Sustainable Development

Development Goals :

13. Climate action

Available on ORBilu :

since 04 July 2025

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